Cairn India dips after slashing FY16 capex

The stock was 3% at Rs 237, extending its 4% fall, after it revised the capex for FY16 from $1.2 billion to $ 500 million.

Shares of Cairn India were trading lower by 3% at Rs 237, extending its 4% fall on NSE, after the company said it has more than halved its capital expenditure (capex) in 2015-16 because of drop in oil price.

“With close to $1.1 billion of capex invested in 2014-15, the company is revising the capex for FY16 from the projected $1.2 billion to USD 500 million, while deferring the rest," Cairn India said in a statement.

‘In continuation of our communication at the end of third quarter of 2014-15 and in light of the current oil price environment, Cairn is taking a proactive approach to capital allocation and shareholder returns," the company said.

The company will be undertaking projects that are economically viable at current oil prices. Additionally management focus is on re-engineering projects and re-negotiating contracts to improve project economics, it added.

Cairn India Managing Director and CEO Mayank Ashar said, "We would like to give confidence to our shareholders that we are more focused than ever to drive operational efficiencies in the current crude price environment. Our cash rich balance sheet and best-in-class cost profile provide a solid foundation to operate our high margin core fields. This gives us the optionality to be selective about growth projects in these challenging times."

The stock opened at Rs 245 and touched a low of Rs 236 on NSE. A combined 780,401 shares changed hands on the counter till 1002 hours on NSE and BSE.